Over the past year, many Americans have noticed that restaurants and delivery services are adding strange service fees to almost every bill, and they’re not thrilled about it.
Restaurants argue these fees are necessary in order to stay financially viable while paying their employees more than ever before, thanks to constantly increasing minimum wages. However, as of July 2024, the state of California is completely outlawing all service fees.
Inflation Has Increased the Price of Absolutely Everything
In addition to the added service fees, American diners have also noted that the cost of almost everything from take-out pizza to coffee has increased with inflation over the past few years. And some say it’s starting to feel like eating out is no longer an option.
But again, restaurant owners say they have only increased the prices of their products because they had to stay afloat. From the increases in the minimum wage to higher prices for ingredients, rising rent costs on buildings, and everything in between, they simply have to charge more to make a living.
It Feels Like Restaurants Are Trying to Trick Customers
However, while ordering a $10 iced latte is frustrating, the average American consumer is far more upset by the surprise fees being added to bills all over the country than the actual increase in their drink’s price tag.
When a menu clearly shows the price, people plan to pay exactly that much. Hidden fees not only enlarge the bill, sometimes past what someone has in their wallet, but they also feel extremely deceptive.
Restaurants Are Actually Doing This on Purpose
Some restaurants believe that raising their menu prices, even though they’re feeling the financial pressure to do so, will deter existing or even new customers.
Therefore, although it may come as a surprise, they specifically choose to keep their menu prices the same but add other fees on the bill instead. And in the worst possible case scenario, some restaurants have done both.
There Are a Wide Range of So-Called “Service Fees”
It’s important to understand that these so-called service fees restaurants are adding to bills are not always tips for the workers who are serving. Instead, they may be going straight to the restaurant owners.
Sometimes, they’re called “cost of living” fees, and other times, they’ll say they are “surcharges” for wage supplements or health benefits. But unless the bill specifically says it’s a tip, service charge, or “kitchen appreciation charge,” it’s not being distributed to the employees.
Restaurants Are Starting to Feel Like Airlines
Going out to eat these days is starting to be just as exasperating as trying to purchase an airline ticket.
Just as airlines offer a low price to start and then add extra fees at the end, the price customers see on the menu is hardly ever what the final bill displays.
California Decided to Put a Stop to These Hidden Fees
To protect its residents from this deception, California has decided that restaurants will no longer be allowed to add surprise fees to customers’ bills.
As Attorney General Rob Bonta explained, “These deceptive fees prevent us from knowing how much we will be charged at the outset. They are bad for consumers and bad for competition.” And as of April 1, 2024, “The price Californians see will be the price they pay.”
California Is Making Another Big Change to the Service Industry
The disallowance of hidden fees will undoubtedly hit certain restaurants that have been relying on the additional income quite hard. But that’s not the only change the state is making to the service industry on April 1st.
Thanks to new legislation passed by Governor Gavin Newsom, the minimum wage for fast food workers will be increasing from $16 to $20 that very same day.
The Minimum Wage Debate
This significant increase has ignited widespread debate throughout the state and the country as a whole.
Some say fast food workers have always made too little and that this will seriously improve their quality of life. Others argue it could be a death sentence for business owners.
These Changes Will Further Directly Affect the Cost of Dining Out
With the removal of hidden fees and the increase in minimum wage to $20, some restaurant owners are saying that prices for California fast food are about to skyrocket.
Fox Business host Stuart Varney explained, “They’ve been relying on those junk fees to pay employee benefits. Now, that money has to come from somewhere else.”
Gov. Newsom’s Laws Are Going to Cost Everyone Money
If increasing the minimum wage for fast food workers and removing the hidden fees at restaurants will increase the prices of menu items across the board, then one argument is that these bills aren’t going to save Californians money at all.
In fact, many argue that it will actually cost the average person, including a fast food worker, far more money to go out to eat. Meaning that increase in their wage won’t make any difference to their savings.
What’s Next for Californians?
When reading the news, it seems that California is making major policy changes almost every week. Whether one considers these changes positive or negative depends on one’s financial situation, occupation, and political preferences.
So, as with any decision, some believe California’s decision to raise the minimum wage for fast food workers and eliminate hidden fees is fantastic, while others are infuriated. But either way, come April 1, 2024, that’s exactly what’s going to happen.
